Rob Ward, head of leadership and advocacy, CAANZ, said all firms need to decide well in advance who will succeed the current partners and plan for that succession.
“This can be more problematic in some firms, for example regional or smaller firms, where a long lead time for succession may not fit expectations for new employees or where there is high staff turnover,” he said.
According to Mr Ward, succession planning needs to be a proactive activity.
“Ideal candidates need to be identified long before they succeed. Firms need to start with a plan and apply a process to achieve that plan. Both the plan and process will need refinement as lessons are learnt and situations change.
“The risk of not having a succession plan can lead to value and wealth destruction. It can be difficult to see the hard work that has gone into building a practice get lost due to a lack of planning for succession.”
“It is never too early to start the process of succession planning and responsibility must be taken by the owner of the business to ensure it enables a return on their business,” Mr Ward said.
Tony Greco, the IPA’s senior tax adviser said accountants need to consider a whole range of options when developing a succession plan, including selling the practice to a non-related party.
In this case, forward thinking is necessary, according to Mr Greco, and accountants should consider ways to optimise the value of their practice in the years before retirement.
“You don’t want to hang all your fees on the back of compliance,” he said.
“If people want to upscale the value of their practice they might want to look at the accounting exemption opportunity to potentially realise more value from their client base,” Mr Greco added.